Raises Early Termination Fee on Smartphones By AT&T

Berita Gadget - AT&T Inc. announced today that its early termination fees for new and renewing smartphone and netbook customers will jump from $175 to $325 on June 1, following similar actions by other carriers.In an open letter to customers, AT&T also said that it will drop the early termination fees for new and renewing customers who use basic and fast messaging rings by $25 to $150 on that date.

Spokesman refused to comment beyond the contents of the letter, which said the early termination fees make it feasible for AT&T to offer industry-leading rings below their full retail prices in exchange for a two-year service dedication. For example, a $199 Apple iPhone would cost $599 without a contract. AT&T has said that iPhone customers pay on average over $90 in service fees each month.

Some bloggers have theorized that AT&T's increase in its smartphone early termination fees is timed to go in to effect prior to Apple's announcement of a next-generation iPhone, and some are speculating that the fees are going up because AT&T could be losing its exclusive right to sell the iPhone in the U.S. within the next year, after years of complaints from users about the AT&T network.

Presumably, higher fees would discourage AT&T iPhone customers from switching to another wireless service if other carriers are allowed to start offering the iPhone. AT&T would not comment on that theory.

AT&T said the new early termination fees, which won't apply to current customers unless they renew after June 1, will decline by $10 a month over the life of a two-year contract for smartphone users & by $4 a month for users of basic & fast messaging rings.

Jeff Kagan, an independent telecommunications analyst, said carriers are fundamentally offering consumers subsidies or loans when they sell rings at reduced prices to customers who sign long-term service contracts. They noted that early termination fees & subsidies are mostly U.S. traditions.

"Phones are expensive," Kagan said. "In lots of countries without early termination fees, the customers are necessary to pay the full $500 or more for a phone. In the United States, [carriers] started subsidizing & continue doing it today. When a carrier helps a customer buy a phone by giving them a loan of sorts, the customer agrees to repay that loan" -- fundamentally through the early termination fee.

Kagan pointed out that when a customer of any type defaults on any kind of loan, there is a penalty involved. "The reason for the ETF is to protect the carriers from losing funds when they give the customer a loan of sorts," they said.

Early termination fees have been controversial. They have been the subject of lawsuits by customers, & in January the Federal Communications Commission launched an inquiry in to excessively high termination fees.

Verizon Wireless doubled its early termination fee on "advanced devices," chiefly smartphones, to $350 last November. & in January, Google Inc. & T-Mobile USA jointly imposed an early termination fee of $550 on the Nexus One smartphone. In response to criticism, Google lowered its part of the Nexus One fee from $350 to $150 in February. Verizon responded to concerns from the FCC by reducing the number of advanced devices affected by its higher early termination fee.

Raises Early Termination Fee on Smartphones By AT&T
Reviewed by Ando Mr
on
5/24/2010
Rating: 5 Berita Gadget - AT&T Inc. announced today that its early termination fees for new and renewing smartphone and netbook customers w...